October 28, 2022
Are you considering your FHA home loan options? You aren’t alone if you’re considering the option of waiting to buy until mortgage rates drop from current highs. How high have the rates gone?
In the closing days of October 2022, the New York Times reported interest rates hit the 7% range for the first time since 2002. Do you worry that such high rates are here to stay? You couldn’t be blamed for thinking it’s a safer bet to hold off on buying a home right now.
The Fannie Mae Housing Forecast for 2022 includes the possibility that mortgage loan interest rates might settle into the four percent range sometime at or near the second quarter of 2023.
If that becomes a reality, could we see an increase in interested house hunters? Some speculate that could bring a return to the hot housing market conditions seen in the summer of 2022.
And if dropping rates in the new year brings a return to the seller’s market, that means you might need to consider a strategy for buying in the meantime.
Should People Think About Buying A Home Right Now?
It might feel to some as if buyers are stuck between high interest rates and a possible return to a seller’s market once those rates begin to fall back down to earth, but there is a way to move forward on buying a home in the meantime.
Some decide it is better to buy now while rates are higher and demand is lower with a “buy now, refinance in the future” approach. If there is a possible end in sight for the current rising interest rate environment, it could make sense to anticipate that end.
Buying A Home With A Plan To Refinance
Getting a house at a 7% interest rate is NOT ideal, but if you already have a strategy for your mortgage that includes refinancing as soon as the rates are better, your plan could help you avoid having to fight other buyers for a home in a newly revitalized housing market in 2023.
No, there are no guarantees rates WILL drop next year, but the potential may be there.
And that is why some think about buying now, and some may even consider buying a home with an FHA adjustable-rate mortgage (ARM), with a plan to refinance next year as soon as rates are more borrower-friendly.
Applying for an FHA ARM shouldn’t be done without learning how this type of loan differs from a fixed-rate mortgage.
You want to make an informed decision about this type of loan and be sure to compare ARM loans among multiple participating FHA lenders. Not all lenders offer the same rates and terms and you’ll want to know who has the best deal.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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